Northgate Is Back And Itching For Another Price War
Northgate Computer Systems looked like a goner this summer, another victim of the PC price wars. The Eden Prairie (Minn.) mail-order company posted losses of $11.6 million in the first half of the year. To keep afloat, Northgate agreed to merge with rival Everex Systems Inc. last spring, but the two later scrapped the deal. Instead, Chairman and founder Arthur B. Lazere in August sold 51% of Northgate's stock to Marjac, a Virginia-based investor group, for an estimated $1.4 million.
Now, Northgate is launching an offensive. At the Comdex trade show in Las Vegas on Nov. 16, Northgate plans to unveil notebook computers that Lazere says will set new price floors. A 486 model with a 120-megabyte hard disk, 4 megabytes of memory, and an active-matrix color screen will list for about $3,700, he says. A comparable notebook from market leader Toshiba Corp., which just cut its own prices by 14% to 25%, now lists for $3,999. But can Northgate survive the price war it hopes to wage? Not likely, says Minneapolis-based analyst Clinton Morrison: Northgate "lacks the financial resources to succeed in the low-cost, high-volume part of this market."